When GE Appliances CEO Chip Blankenship approached GM Mark Shirkness in 2014 to lead the division’s integration with Electrolux, the 30-year GE veteran looked forward to the challenge. He just didn’t know he would have to do the job twice in two years.
Blankenship tapped Shirkness for the task in part because of his broad knowledge of GE’s appliance business. Shirkness joined GE in 1986 and has worked in areas including sales, marketing, quality and distribution.
“I know how to navigate the organization very well after all those years,” Shirkness told Insider Louisville during a recent interview at Appliance Park.
He said he “couldn’t wait” to take on the challenge.
“I like doing big projects, particularly ones that haven’t been done before,” he said.
And, he said, the transition group’s work required innovation, which made it interesting, and its work was critical to the future of Appliance Park, which made it rewarding.
Over the next 15 months, Shirkness and a team of 14 worked to integrate the venerable GE appliance division into the Swedish multinational company — only to see the deal get derailed late last year. Federal antitrust regulators sued to stop the deal, saying it would result in a duopoly, with Whirlpool and Electrolux controlling almost all of the U.S. appliance market.
As the government’s antitrust trial was about to go into its fifth week, GE pulled the plug and looked for a new buyer.
About five weeks later, GE announced it had agreed to sell the appliance business to China-based Qingdao Haier — and Blankenship again asked Shirkness to oversee the transition.
The move made sense because Shirkness and his team, which stayed largely intact, had just gained valuable experience in the failed merger with Electrolux.
“There’s no substitute for experience as your teacher,” Shirkness said.
But the team would have to hustle: With Electrolux, it had 15 months to complete the integration, and with Haier, it would have less than half that time.
“The timeline was really short,” Shirkness said.
In addition, while some of the processes would be similar, the team quickly identified key differences in the two deals. Shirkness said the acquisition by the Swedish company required more of an integration into an existing system, from IT to purchasing and distribution. By contrast, the Haier acquisition required the team to transition from one owner, GE, to a different owner, Haier, but it would remain an independently run unit.
While Electrolux leaders would have taken a more hands-on approach to guiding the actions taken at Appliance Park, Haier intends to stay more in the background, with the local appliance team largely remaining in charge of the business. It has taken a similar approach in prior acquisitions, including the 2012 purchase of New Zealand-based Fisher & Paykel.
With the Haier acquisition, the transition team’s goal was to create a company that could stand alone from its parent. That meant figuring out who would handle a lot of the support functions that, so far, had been handled by GE corporate.
Lining up dominoes
Many of the employees, Shirkness’ team included, took a lot of that support for granted and only realized during the transition how complex their job would become.
That became clear when the team looked at what it needed to do to get employees their paychecks after the transition. GE’s human resources team told Shirkness that smooth delivery of the paycheck requires the assistance of — and contracts with — 37 vendors, from payroll and workers’ compensation, to retirement benefits and whom employees can call if they have a question about their pay stub.
“To us, it’s just a paycheck,” Shirkness said.
Until you realize 37 dominoes have to line up perfectly before a direct deposit happens, he added.
The team had to figure out how to migrate to a new email system, who would host the website — and write its content — and how GE, as a Haier company, would acquire the 10 engineering software packages it previously had obtained through GE.
In many cases, the transition team had to figure out whether it could continue to obtain the service through GE corporate, whether it would have to transition to Haier, or whether the Louisville unit would have to find a new vendor and negotiate on its own. The answer could be different depending on the function — IT, HR, finance, etc.
The team had to find the solutions quickly, and sometimes pursued all three options until it became clear which one would work best. For example, getting human resources support from GE corporate would no longer work. But the small Louisville-based HR team also could not rely on Haier for support, because of the company’s limited U.S. presence. That left only one option: find a subcontractor to provide HR support.
Shirkness’ work involved meetings with the entire transition team about twice a week to report what had been done and what still needed to be done. In between, Shirkness said he met with team members individually about once every week or two. In between, he made calls to China, of which there are “still a fair number,” he said. While most of his colleagues in China speak English well, Shirkness has hired a tutor to learn some Mandarin.
The team asked other people in various parts of the campus to help accomplish the goals the team had set. In total, up to 300 people — out of a workforce of 6,000 — spent part of their weeks to work on the transition.
Shirkness said he had two additional, critical tasks to assure that the transition would work: He needed to be visible — he walked the buildings, talked to employees, attended staff meetings — to answer questions, seek input and to act as a lightning rod.
The second aspect, one that goes back to when Blankenship first approached him for the task, he said, was, essentially, to serve as a cheerleader.
When leaders fail to convey confidence and inspiration — or simply fail to communicate — people are going to make up their own minds about whether the transition is good or bad for them, Shirkness said. And pulling them into a positive direction was key to keeping employees — and keeping them productive — because the work at Appliance Park — designing, producing and selling appliances — had to continue throughout the process and post-acquisition.
While the transition has run smoothly, some work remains. Shirkness and his team have devised a 100-day plan to get the entire appliances division, including locations outside the United States, transitioned to Haier. In some cases that may involve subleasing sites from GE or finding new spaces and signing new leases for overseas operations.
In any case, the transition team will remain in place through the end of the year, for trouble-shooting and to finalize some odds and ends.
Shirkness said working on the transition team also has opened his eyes to the possibilities the acquisition by Haier represents. Haier is the world’s biggest appliance brand but remains relatively unknown in the U.S. because of its limited presence here. Through his work on the transition team, Shirkness said he has learned about the company’s 10 research and development centers around the world and its “remarkable” technology, product development and ability to compete on a global level.
When Shirkness now thinks about the possibilities, from economies of scale and global purchasing power, his mind races.
“We’re No. 1 in the world now,” he said. “I never would have contemplated that at the beginning.”